Quite a few people from the startup and tech community in Hong Kong were out of town recently, but, no, they weren’t in Shanghai or Israel. Most of them were visiting the neighboring city of Macau.
Regulators across the region are stepping up the crackdown on cryptocurrencies, and as a result, many business activities related to blockchain and cryptocurrencies have been forced to move to Macau.
Chinese authorities shut down all domestic cryptocurrency exchanges in September last year. Bitcoin price took a plunge immediately. In the same month, Hong Kong also moved to ban initial coin offerings (ICOs), which enable startups to raise funds by selling cryptocurrencies.
Hong Kong’s Securities and Futures Commission (SFC) has stated that companies planning ICOs need to register with the regulator and abide by certain rules.
That suggests that ICO activities need to comply with the city’s rigid capital-raising process for financial institutions.
South Korea is also reportedly considering banning the trading of cryptocurrencies on exchanges.
Although the Monetary Authority of Macau forbids financial institutions from getting involved in or offering any services related to cryptocurrencies, there are no rules restricting ICO activities by private sector.
For example, the 2018 Finwise Summit, organized by International Blockchain Application Federation, was held in Macau over the weekend.
The meeting was attended by over 3,000 people, making it the most popular blockchain meeting in the world. More than half of the participants were from mainland China’s IT companies, startups and investment firms.
Blockchain is a major investment theme this year. However, authorities have an ambivalent view of blockchain. On the one hand, they don’t want to miss out on the business opportunities linked to the technology. But on the other hand, blockchain is largely used in Bitcoin, LiteCoin, Ethereum and other cryptocurrencies which they have warned investors against.
They fear that cryptocurrencies may develop too fast and spin out of control, thus posing a threat to the overall economy.
In fact, cryptocurrencies, though booming, are still immature in both technology and standards, and there is a lack of sound regulation to provide adequate protection to investors.
As such, investors in cryptocurrencies are more or less just betting that luck is on their side.
This article appeared in the Hong Kong Economic Journal on Jan 16
Translation by Julie Zhu
[Chinese version 中文版]
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